Alejandro Hazera University of Rhode Island, USA Salvador Marin Hernandez University of Murcia and economists. Carmen Quirvan University of Rhode Island, USA Zabihollah Rezaee University of Memphis, USA Pauline Weetman University of Strathclyde, UK.
INTRAFIRM TRANSFERS ON MARKET METRICS
ABSTRACT
INTRODUCTION
MOTIVATION OF THE STUDY
If the cash flows generated by intra-firm transfers are positive (negative), then investors, ceteris paribus, are likely to assign a higher (lower) value to the firm's stock. Thus, any factor, such as intra-company transfers, that affects reported cash flows and taxes has the potential to affect the value of the company.
SAMPLE SELECTION AND DATA SOURCES
Firms in regulated industries generally have different incentives than those in unregulated industries, and therefore, we excluded financial institutions (SIC codes municipal services (SIC codes) other quasi-regulated industries (SIC codes and other industries with SIC codes 8000 or higher.We also deleted outlier observations for the top and bottom 1% of stable year observations to mitigate the effects of potential changes.
HYPOTHESES DEVELOPMENT, RESEARCH DESIGN, AND EMPIRICAL RESULTS
Na is the number of four-year observations in the regression model. It is not the same in each regression because of the asymmetric reductions in the sample due to missing observations or outliers. MNCs use these international internal transfers to move income out of the U.S. One would expect an inverse relationship between transfer prices and global taxes paid by these firms.
STATISTICAL AND ECONOMETRIC ISSUES
These results suggest that providers of capital and other users of financial statements may not distinguish tax-planning-based breaks in the time-series profit recognition process from true changes underlying profitability.
CONCLUSIONS
There are additional factors to consider beyond transfer pricing in analyzing a firm's systemic risk, market capitalization, and corporate tax burden. Existing transfer pricing models and literature, notably Harris (1993), Klassen et al. 1993), Borkowski (1999), and the present analysis, make assumptions of linear relationships between transfer pricing and measures of market operation and performance, and between transfer pricing and corporate tax burden.
NOTES
The dollar amount of intrafirm intergeographic trade volume is used as a proxy for the level of transfer pricing activity. As in Klassen et al. 1993), the empirical tests do not capture the effect of this tax shelter.
ACKNOWLEDGMENTS
Because we focus on the effectiveness of IRS Code 482, we do not include average foreign tax rates in our tax analysis. Although we find a positive relationship between intra-firm transfers and risks, we do not suggest that this relationship should induce MNEs to reduce the extent of transfers.
An analysis of intertemporal and cross-sectional determinants of the earnings response coefficients. Journal of Accounting and Economics. Geographical Income Shifting of Multinational Corporations in Response to Changes in Tax Rates. Journal of Accounting Research (Suppl.
APPENDIX. NATURE OF SYSTEMATIC RISK
Risk Reduction and International Diversification: An Analysis of Great Britain 1995). International taxation: Transfer pricing and information on non-payment of taxes. Because the variance of market returns is constant across firms, the main determinant of systematic risk is b. Since international diversification can increase a firm's exposure to other widespread economic factors, it can increase a firm's standard deviation s2j.
STANDARDS AND FINANCIAL REPORTING UNIFORMITY: THE
Much less attention has been focused on the possible effects of IAS adoption on the uniformity of financial reporting in a given jurisdiction (domestic uniformity) and on the comprehensibility of financial disclosures to domestic users (Nobes, 1990). In this case, the effect of IAS adoption on the degree of uniformity of domestic financial reporting practices is an open empirical question.
MOTIVATION FOR STUDY
It is doubtful whether any of these situations will occur in the case of the IAS, given the generally recognized tendency to endorse various alternative treatments (Nobes, 1991; Ruechhoff, 1987).
NATURE OF FINANCIAL REPORTING ENVIRONMENT IN TRINIDAD AND TOBAGO
The effects of these factors on the nature of Trinidad and Tobago's financial reporting environment are described below. Therefore, the introduction of the 1995 Companies Act did not significantly change the financial reporting environment facing listed companies in Trinidad and Tobago.
RESEARCH METHODOLOGY
To determine the number of alternative bases/methods used for selected elements of the financial statements, two reviewers examined the content of each firm's financial statements, for each year, independently. The second measure was an adaptation of the Herfindahl Index (H) that is often used to measure industry concentration.
DATA ANALYSIS
Increase in the number of bases/methods used to account for or report on a selected financial statement element over the years examined. No change in the number of bases/methods used to account for or report on a selected financial statement element over the years examined.
RESULTS
The distribution of companies among the bases used for the valuation of property, plant and equipment is summarized in Table 8. This finding suggests that the adoption of the IAS may have been associated with a favorable trend in the distribution of companies among the alternative bases .
STAGE THREE ANALYSIS – OVERALL UNIFORMITY SCORE (MEASURE 1)
The financial statement elements that showed a substantial and consistent increase in the degree of financial reporting uniformity were examined to determine the reason for the change. Therefore, the adoption of IAS was responsible for the increase in financial reporting uniformity of all three elements of the financial statements, which showed substantial and consistent improvements.
SUMMARY AND CONCLUSIONS
The change, which took effect in 1993, was probably the result of the adoption of IAS as TTAS since IAS 19 (revised 1993) does not permit the cash basis of expense recognition for Retirement Benefit Plans. For the third financial statement element that experienced an increase in financial reporting uniformity following the adoption of the IAS, Valuation of Interest in Associated Companies, two firms switched from the historical cost method to the equity method.
LIMITATIONS
A closer examination of Table 12 reveals that several of the gains in uniformity were due to changes in the distribution of companies among the alternative bases/methods used to account for the selected accounting items (all six items examined experienced favorable changes on this measure ) rather than a reduction in the number of alternative bases/methods used by companies (four of the six elements examined experienced favorable changes on this measure).
IMPLICATIONS
High percentage of firms that provided little or no disclosure about the methods/basis used to calculate retirement benefit expense (prior to 2002), and to a lesser extent inventory cost and investment valuation short term, it clearly indicates a combination of faulty monitoring of financial reporting and/or low quality external auditing. This quality gap did not directly affect the degree of uniformity of financial reporting among the companies included in this study since in all but one case the methods disclosed were in accordance with IAS.
SUGGESTIONS FOR FUTURE RESEARCH
International accounting standards and economic growth: an empirical examination of the relationship in Africa. Research in Third World Accounting, 2, 27–43. The quest for international accounting harmonization: a review of the standard-setting agenda of the IFRSC, the US, the UK, Canada and Australia The International Journal of Accounting.
INTO THE IMPORTANCE, USE, AND TECHNICALITY OF SAUDI
INFORMATION
If companies provide quality information, then this can stimulate the interest of the general public. Our objective is to find out the importance of different sections of the annual report of the corporation.
PREVIOUS LITERATURE
They also found that the profit and loss statement and the balance sheet are the most read parts of the company's annual report among all users. Different groups of external users of annual reports of companies in Saudi Arabia have similar views on the importance of different parts of annual reports of companies for their decision-making process.
RESULTS AND ANALYSIS
The simplicity of the management report to individual investors can contribute to this. The statement of retained earnings was considered the least important part of the annual report.
DISCLOSURE IN A PERIOD OF COMPLEX CHANGES: THE
The new regulation may repeat requirements from the existing rules, as well as introduce completely new requirements (Abd Elsalam, 2002). To what extent did the introduction of the new accounting rules improve the previous disclosure practices of listed companies in Egypt.
PRIOR LITERATURE
1994) suggest that seemingly inconsistent results from disclosure studies may be due to limitations of the data, the form of the regression equation, or the limitations of the disclosure checklist. Our study focuses on the construction of the disclosure checklist and controls for the potential effect of the regression equation by comparing the results of various regression procedures (Cooke, 1998).
CHANGES IN ACCOUNTING REGULATION
Consequently, breaking down the checklist into subsections representing types of disclosure (such as established/traditional) can help the researcher identify the various factors that influence accounting disclosure when studying compliance using a disclosure checklist. The shares of the closed companies traded only among a relatively small select number of original shareholders and were listed primarily to obtain tax exemptions.6 Of the remaining 155 "public" companies, only about 100 were actively traded.7.
CULTURE CHANGE
In the Egyptian Stock Exchange, market pressure from shareholders and investors is not as strong as that in developed markets (Elsadik, 1990). As a result, the non-compliance costs for infrequently traded companies were not high compared to the compliance costs.
DEVELOPMENT OF HYPOTHESES
Change in accounting information is tested through the two hypotheses explained in the following section. In the first period (year) after the new rules came into force, the level of disclosure is linked to various company characteristics.
TEST VARIABLES
Is the information point jointly required by all three, two or only one of the rules. This is partly explained by the new rules that are required to revitalize the stock exchange.
CONCLUSION
An assessment of voluntary disclosure in annual reports of Japanese corporations. The International Journal of Accounting. Voluntary disclosure in the annual reports of New Zealand companies.Journal of International Financial Management and Accounting.
LAWS AND REGULATIONS
The role of accounting standards in supporting the capital market and reforming the accounting approach to meet the needs of investors. Proceedings of the Conference of the Ahly Egyptian Bank, Cairo, Egypt. Firm-specific determinants of the completeness of mandatory disclosure in the corporate annual reports of firms listed on the Stock Exchange of Hong Kong. Journal of Accounting and Public Policy.
SOCIAL ACCOUNTING AND REPORTING IN THE ARAB
MIDDLE EAST: A POSTCOLONIAL PERSPECTIVE
Furthermore, the study considers the potential for more radical positions of social accounting in the AME, inspired by a critical approach and the specific history and culture of the AME. The social accounting literature has criticized current manifestations of social accounting in the Western context for their failure to play a significant emancipatory role in society.
SOCIAL ACCOUNTING AND REPORTING
The ultimate goal of social accounting and reporting will be to enable accounting to participate in achieving the welfare of society as a whole. However, social accounts and reporting manifestations have largely failed to deliver on this enabling and liberating potential.
CRITICAL INSIGHTS INTO SOCIAL ACCOUNTING IN THE AME FROM A POSTCOLONIAL
While these concerns are expressed about social accounting and reporting manifestations in the Western context and literature, little is known about these manifestations in AME. This study is concerned with presenting the debates, knowledge and manifestations related to social accounting and reporting in a number of Arab companies in the Middle East.
PERSPECTIVE
Colonialism/imperialism, therefore, is seen beyond the "physical occupation" of territories and the resources of these territories, implying "the historical process by which the 'West.'" The "rule of visible presence" is accordingly replaced by " the "invisible government" of corporations, banks and international organizations (the IMF and the World Bank, for example) (Held & McGrew, 2002, p. 13).
POSTCOLONIALISM: A WAY-FORWARD
Contemporary postcolonial thought thus argues for the abandonment of the clash of civilizations and the ancient history of confrontation to be retold with an eye on the transactive/transcultural aspect of postcolonialism, involving a two-way process of interactive dialogue, negotiation and exchange and equal participation of East and West in the transnational institutions of global governance (Gandhi, 1998). Additionally, postcolonial theory allows us to realize how the colonial experience has affected the colonizer and the colonized, a realization that helps connect their experiences and potentially create a common ground for developing a universal framework for global accounting/social accounting, where transactive and transcultural interactive dialogues form the basis for communication.
COLONIALISM AND ACCOUNTING IN THE AME
Furthermore, Samuels and Oliga (1982) explain that especially in the case of AMEs, religion can have a significant influence on financial and economic reporting, which is largely neglected in Western accounting, including IAS. Consequently, the way accounting is regulated and developed in the nine Arab countries included in this study, and the main factors influencing their development, indicate the lack of any regulatory requirements for social disclosures in any of the nine Arab countries.
ISLAMIC INFLUENCE ON ACCOUNTING IN THE AME
The dominance and influence of Western, especially British and American accounting systems, on accounting practices. Despite this Islamic influence on accounting in many Arab states, none of their governments have developed any regulations or reporting requirements that would govern the disclosure of Islamic influence on their activities.
RESEARCH METHODS AND SAMPLE
Consequently, the researcher tried to download and print the annual reports of the rest of the companies from the Internet. The researcher, however, was not always able to find a website related to the companies on the top 100 list.
SOCIAL REPORTING PRACTICES IN 68 ANNUAL REPORTS FROM THE NINE AME COUNTRIES
Again, as in the case of the 'economic' dimension, there was no evidence of any 'negatives'. The category of 'employee-related issues' was hit most often in the analysis in terms of the number of companies reporting.
DISCUSSION AND CONCLUSION
They also indicate the significance of the State in the business environment in the Arab world. Therefore, as in the case of social accounting practices in the Western context, such as that of the UK context, social reporting is mobilized to serve companies' business interests.
APPENDIX A. SAMPLE COMPANIES
Kuwait Financial Public Holding Company Bank Al Jazira Saudi Arabia Financial Public Holding. Company Bank of Bahrain and. Public holding company Financial Kuwait Projects Co. Faysal Islamic Bank Bahrain Financial Public Holding company.
DIMENSION
Details of the workforce in the company, such as the number of employees and their qualifications. Management information This could include information related to the names of the Board of Directors and the management team.
APPENDIX E. RESEARCH INSTRUMENT OF THE CONTENT ANALYSIS STUDY ‘OTHER CULTURAL
CHARACTERISTICS OF ANNUAL REPORTS’
REFORMS IN JAPAN: FINANCIAL ANALYST EARNINGS FORECAST
MANDATES JAPANESE
CORPORATIONS TO ADOPT
INTERNATIONAL ACCOUNTING STANDARDS
Thus, after the introduction of the IAS in Japan, forecast errors for management forecasts of earnings increased. Consistent results were found even after taking into account “the concurrent growth in news stories.”
REVIEW OF JAPANESE ANALYSTS’ EARNINGS FORECASTS AND EARNINGS MANAGEMENT
Inoue and Thomas (1996) identify fixed assets and marketable securities as providing management with many opportunities for earnings management in Japan. Cherry picking and timing the sale of fixed assets and marketable securities are other means of earnings management.
RESEARCH HYPOTHESES
This change is expected to lead to higher forecast error on current profit due to the volatile securities markets. Application of IAS 19 requires the application of the accrual basis of accounting when recording pension costs and obligations.
